You are required to write an academic report to Jan Thomas to assist her understanding of Hinkley Limited's management accounting system, problems and alternatives as outlined below.
a) Describe the current cost system including its strengths and weaknesses.
b) Using the current cost system, calculate the unit cost and gross margin percentage for the regular briefcase and the executive briefcase. Make sure all calculations are shown.
c) Describe the proposed Activity Based Costing system, the benefits from using it and explain why those benefits occur.
d) Using Activity Based Costing, calculate the unit cost and gross margin percentage for the regular briefcase and the executive briefcase. Make sure all calculations are shown.
e) Determine whether Hinkley Limited should cease to produce the regular briefcase and concentrate entirely on the executive line? Discuss and provide precise evidence.
f) Explain how could Hinkley Limited's Activity Based Costing system be improved and also explain how any implementation issues could be overcome?
g) What if any recommendation(s) would you make to Jan Thomas? Make sure you provide precise evidence for any recommendations.